Communities The Recession Has Left Behind Forever

The Brookings Hamilton Project recently pointed out that some of the communities affected by the 1980 to 1982 recession have still recovered. The same is likely to happen to many communities which have been devastated by the current recession. Most of these are areas already had little or no economic growth before the economic catastrophe hit in 2007.

“Distressed communities continue to suffer, in part because of a mismatch between the skills of local workers and the needs and wants of business and industries,” the report says.

The research gives Buffalo as an example of a city which never recovered from the downturn 30 years ago. It will almost certainly not recover from the damage of the current economic trouble.

The think tank has three proposed solutions, none of which are likely to work: (1) attract new businesses to the hardest hit regions, (2) help displaced workers though re-education and financial support, and (3) match workers to jobs.

The solutions are unrealistic because the programs will never receive the large amount of financial support that they will require from the state, local, or federal governments. This leads to the horrible conclusion that some pockets of America will never recover from the impact of the downturn. They will remain economic and unemployment black holes which can not be filled. The capital needed to satisfy the requirement for their recoveries will never ever be available.

The recovery of the American economy by region will be, because of the current nature of local and federal deficits and low tax receipts, one of triage. This may be unimaginable to many US citizens. America has been able to pull large portions of the nation from collapse in years past. The Dust Bowl region, as an example, eventually became home to a prosperous agricultural and business environment again. But, the federal government is already stretched financially and has begun the difficult process of deciding which national programs will have to be curtailed over the next decade.

Many forecasts show that Social Security and other “safety net” programs will need to pay out less than they have in the past. Government expenditures in general are likely to be lowered as the annual national budget deficits remain high and the national debt as a percentage of GDP continues to grow. America will be faced with the prospect of higher taxes on what is likely to be a shrinking workforce as Baby Boomers retire. There are few if any well-regarded projections which show low taxes and high government spending as a possibility as the decade moves toward its end.

The American Dream as it is seen through the eyes of people in particularly depressed regions is over – that is, unless they can be retrained or be relocated. Brookings is right about that.  But, the U.S. won’t be able to help the weak communities when it is barely able to handle the problems of regions that are expected to slowly recover from the worst economic slowdown since the Great Depression.

Douglas A. McIntyre